Transcripts For CNBC Squawk On The Street 20150114

Tenyear below october lows right around 1. 8. 30year, a record low, above 2. 40. Road map begins like this futures taking abig hit. Monthly retail sales log the largest drop since this time last year. Banks on the hot seat. Jpmorgan misses estimates across the board. Well hear from wells fargo. Good year for gm . Auto giant expecting improved profits in 2015. Futures extending losses as weaker than expected retail sales in the u. S. And concerns about Global Growth. Sales fell. 9 in december even if you strip out gas and autos, sales in most other categories fell below estimates on a day where the world bank jim, says global economys running on a single engine and that is us. 24 hours ago a mark up 1. 5 . Everything seemed great. Then copper fell kb homes disappointed, next thing you know were down big. I caution people that we open down very big, maybe midday something happens thats not so bad. I didnt think wells was that bat bad. Just disappointing, except for people who have been following banks. I think that the market is in a weird place. Not a bad place, but a weird place, intraday you can fall 400 peak to trough 10, and that is a sign that we are in some sort of new volatility mode. Not were in a crash mode. Really want really want to make that point. No Systemic Risk in the country. Falling on nothing, kbh, tiffany, sandisk, tesla, express scripts, a lot of anecdotal stuff happening. Kb homes, i was on the Conference Call hilarious, frankly, what did they say was bad . Chinese demand in orange county. Give me a break. They are a terrible operator and they are downgraded. I bet lennar downgrades that. Sam disc samsung putting the screws look i can make excuses for everything. Tiffanys hard to understand. Were in this position where 3m report a great number and well be saying, 3ms good and forget about kb homes. Stewart miller will sit here blame the chinese. Like kb homes and tesla. Look falling copper down 5. 5 . Look chinas 40 of world demand on copper. They were 11 increase 6 months ago. Now flat in copper. Were net importer of copper suddenly hurt by copper prices . Give me a break. 5. 8 of Construction Costs are copper wiring. Construction costs are 50 of new home. Im sweating the program. All right. I dont get that retail sales number. Down. 9 . All we do sit here talk about a great tax for the u. S. Consumer. I think were conditioned to believe gas prices dont stay low. How we think as a country. That is true. Remember what Terry Lungren said yesterday, fill up a bunch of times before you realize its real. Numbers out of the permian and eagleford in the last few weeks show not kidding dramatic increase in production. Not supposed to happen. Gulf of mexico, huge leap in production. These are not supposed to happen. Idea that gasolines going to stay here is diesel has lagged. Diesel has lagged dramatically. Diesel has taken about 40 of hit that gasoline has. Diesels next. Diesel is what our country runs on. 25 of net imported oil goes to trucks. Wait until you see the windfall theyll get. No one wants to hear good news. Only good news is that ive taken cactus my tortoise put her in a Nature Preserve so she can have friends, literally. Im scared to say anything positive because data says im not supposed top yesterday i was scared to say anything negative bought data said i shouldnt. Ways to treat Mood Disorders, there are drugs. Quite a few. Fewer and fewer many more with fewer side effects. New drugs. All of that said drugs that are going to treat the Federal Reserve at this point in terms of how they go about trying to figure out with a tenyear 1. 8 with an accommodative policy now trillion dollars, they could sell today. In an economy, where are we . Its worrisome. It is. Not to mention fears of the mark in terms of oil and gas and where that bleeds over. Spreads are higher now. You know borrowing is extraordinarily good. But spreads are higher than theyve been in the past to that trend. Weve had a big run. Right. Rest of the world slowing dramatically. 3 off alltime intraday highs. The market can go down shocker, it can go down. Even celgene can go down. I thought they passed a law saying that couldnt go down. No that was camelot. Its a different show late early 60s. Mortgage worth, biggest jump for mortgage apps, purchases up 24. Refis up 66 . Im refiing now. You know you always refi something. I like to refi. Something. Now watch 10,000 fee, first two years. This is my dad came back from the war and there was a g. I. Bill, we always look back and said, how did they get those rates . They got them again. We all get the g. I. Bill. 30year fixed, 3. 89 below 4 since 2013. People saying tenyears going to some level weve never seen. Europe didnt rally when the eu counselor said that they can do whatever they want. Qe doesnt matter. Do qe well find on the 22nd. Jeffrey says were going to 1 . Youve had a call 14 days anything. Secretary perez said i have a good call on employment. Im due for a fall. National Retail Federation withite holiday sales figures. Courtney reagan at hq with some numbers. Thats right. We have the top line number national Retail Federation says holiday sales for november and december including instore and online grew 4. 0 yearoveryear. That is slightly below forecast of growth of 4. 1 . I have to say, im surprised that it even came in that strong, after we saw the december retail sales number which is input into how the nrf figures out holiday sales number. I beat Steve Liesman on my bet, below forecast. Back to you. And november revisions downward. Interesting day for retail metrics. We can sit here and say retails bad or talk to the individual retailers, like i do and theres a lot that were good and some not so good but no one was bad. Look i dont know how they get that number. We dont have amazon david youre the only guy thats cracked the amazon code. Well look back and see from shippers whats going on. Numbers are no longer as relevant as they were. You say, hey, shoot the messenger . No, im saying datas not good. The countrys changed. Its a technological revolution. I had flextronics on all of the things youre seeing about what youre buy, its all changing. Take the case of apple. Is apple in the retail sales number perfectly . I dont think so. No way. Apple had unbelievable sales. Right. Thats a retail our largest. Its that whole theory that david berman talked about many times, samsung to a lesser extent apple and amazon. Bermans a smart guy, been around a long time. The amount of consumer dollars sucking up that doesnt get measured as effectively. Ive got the new i dont know if you got the new phone. Thats a gigantic retail sales purchase. Where is it in the numbers . Right. Numbers, you can do whatever you want with numbers. Come up with all i can tell you, people want our treasuries because whatevers bad in this countrys far worse everywhere else. Right. Jpmorgan chase reporting Fourth Quarter earnings 1. 19, a miss. Higher than expected Legal Expenses weighing on results. Wells fargo, in line with estimates, profits up on loan growth revenues come in above expectations. Jpmorgan, the biggest miss sings 08, jamie dimon on the call saying banks under assault. Asked to explain that and said youve got to be kidding me. There was a legal charge that i didnt count on. Deposits this is going to sound strange banks are too successful. Deposit growth at wells fargos huge. We cant make as much money on deposits at this price. Sole at 3. 04. Nim is what everybody focuses on. Step back and say the groups been strong its going to correct because rates are just too low. They cant make as much money as we thought. Terms of Net Interest Margin particularly at wells fargo. Interesting, the loan growth 64 of the commercial and Consumer Loan growth at jpmorgan was strong but were not going to talk about that. We talked about how much they made on deposits. Analysis people use for banks is dependent on rates. Look what jpmorgan says and say, forget everything they say. Look at rates. And then look at charges and thought we were done with charges when tony west left the Justice Department. What are the charges . Where does it come from . Analysts call for jpm going on now. I listened in on journalist call. Jamie dimon, as he often likes to do saying positive things about the future for the u. S. , in particular, the consume weighing in on this idea of lack of wage inflation, he said he thinks he will see soon wage inflation, pointing out percentage of income that the average consumer pays toward Interest Payments the lowest from ever from the highest not long ago during the crisis. The one thing i thought was interesting, all of these legal fees and Everything Else were paying things to question judgment, why we bought bear stearns. I mean yes, they got snookered there. What i find interesting, whats the compensation level of the banks themselves . We no head counts way down 7,000. Where the hirings not going on in banks. Hiring theres restaurant construct, naunsonresident construct is a bright spot. Were in a day where people are saying rates are scaring me lets sell everything well look at it again a couple of days from now when maybe we have data that feels better. There was a big debate there is morning whether or not its fair to ex legal costs from operating results. In modern banking the new attorney general is not interested in revenge factor. Theres a lot of states that matter. But if youre paul weiss, lawyers, theyre doing well. Doing great. Theyve benefited. Its a wealth transfer from the government to the lawyers. Are we done. Do we ever get out from under it . Yes we do. We i should say they not we. The statute of limitations. We do youre able to do theres fresh credit reports that after seven years you cant go back. I mean, theres just like the law does not allow constant beating for what happened 20072008, just doesnt. Look these are new charges. They gave you they didnt give you that sense that youd have them. Right. But citi did. Remember citi had them at the end. Lawyers did well during there is period. I went to law school, its an awful job. They work hard. Dont do well. As opposed to you now. Work saturdays, god, can you imagine . Listen im hosting saturdays. I hosted saturday. Good crowd. Did you . Yeah. When we come back comments that elon musk made last night sending shares of tesla down sharply. Premarket, after blowing that 280point gain yesterday, dow looks to open down another 230. Well see what we get when the opening bell rings in about 15 minutes. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Futures look no good after retail sales disappointment. Jpmorgan misses and other things going on that well get to in a moment. Two big automakers in the spotlight. Gm expects 2015 operating profit to rise. And tesla, falling in premarket. Last night in conference in detroit, musk said the carmaker may not be profitable until year 2020. Also spoke about teslas china sales. Take a listen to that. China was weaker than expected. Mostly, i think, because of misperception about the difficulty of charging which were correcting and we are seeing uptick in our sales in china. Just werent all that significant in the Fourth Quarter. I think the chinas situation temporary and will get corrected later this year. Barclay out with a note jim, saying margins are going to be downside for the latter part of the decade. That was a bizarre interchange with this man. Basically, just if mark feels were to give that interview from ford if volkswagen give this interview in 20250, 2030 the man does get away with a lot of things, a lot of hyperbole others cant get away with. Bottom line why arent they selling better in china . Charging problems. Misperception of people had a thought there was inability to charge effectively. 1. 3 billion people there. Couldnt some of them figure it out . Apparently helping them figure it out. I think they have management you think teslas a cult personal. Tesla amazon netflix, cult person personal. They like to shop on amazon be part of the club of netflix and makes everybody feel why dont we own a piece of them . Ive had a problem with the stocks but i never get in the way of the colt because colts last longer than we think. This is not jim jones. Model 3 will be a mass market car, 30,000 car that they would make a few million a year. Thats as many as bmw makes. 25 billion company. Its saying there a lot of hope involved in the actual price of the stock and hope is not as good. Gm call by the way, portrayed as being the world i getting weaker because gm had the line but theyre taking share and doing better. Europe looks good in gm presentation but thats not whats pulled today. Whats pulled today, saying things are bad, because todays to the downside. Last night you said you can find names you like and check once a week or you can try to as they say, buy red, sell green, on a daily basis. If youre nimble you want to do that with exception sof oil where you you want to keep selling. Used the example of disney disneys a net winner in every category, stock will be down when its down buy a little. Celgene, winner in every category, when the stocks up sell a little. Thats where we are. Or say were in a volatile period, i think the United States will come out fine. Thats a sanguine analysis. I was on twitter, buy index fund i like. Kkr, Henry Mcveigh on the show a bit, outlook now, we do advise folks to raise cash and to tilt the invested part of the portfolio to become more opportunist nick 2015. You disagree . Raise cash never bad to take a profit. But i think that i dont like the that to me is interpreted as dont stay the course, and i want to stay the course. Theres no Systemic Risk in the country. Theres a lot of good things. Go down 5 . Is someone downgraded wells 53. I get back in at 48. People who watch at home are tired of being whipped around about what hedge funds do. If theyre in oil, copper there are structural problems, high yield structural problems. But if youre in Good American companies that have earnings dividends, great cash flow arent sensitive to the economy i cant tell you to sell disney at 95 and get back in 91 im not that good. Ive traded for years. Just not that good. Look back at midyear update yesterday, strangely enough he like everybody else failed to have any idea that oil would be coming back. Barclays downgrading, they loved oil, loved oil, now using price targets of 50 cents for oils that they liked. I question that. Well get cramers mad dash in a moment. Count down to the opening bell. Look at the premarket. We open as we appear to be opening, this would be the worst day for the dow since december 12th. Back in a moment. Can you say volatility . Man, we have seen a lot of it. Almost started really call it october, but it has picked up. That will keep people away from the broader market. As you see we are headed for a significantly down open as opposed to yesterday where we were significantly up. Right. Up 286 points that was unusual. Opened down, 300, unusual. Lets get to our mad dash. Stocks as we point out, six minutes before the opening bell. Bank of America Merrill lynn. Cuts numbers badly, ibm. Calling it reset yet. You ought to think about buying. Its a bottom in cash flow. When you cut numbers, you ought to say im thinking of selling it. I saw it with sand dissic. Everybodys making excuses for companies under pressure. Listen, ibm, i think not doing well and no reason to own it especially if earnings come down as much as bank of america and merrill lynch. Well below street. Not recommending the stock. About to have a major restructuring. What . What . What are they going to restructure. Whats left to restructure . Im tired of aster risking ibm. Get out of the asterisk game. Ibms not good. Its okay. Not everybodys good. Dont feel bad. Its okay. Freeport, it is bad. Fcx the ones everyone talking about, about coppers bad, oils bad. Bol bought oil at picked the wrong time to get into oil. Yes. Theyve walked into an operational buzz saw. Sniffing glue. Look a yield that this company, i dont want to this companys 17 billion in debt. Company people are focused on as being the weak sister in oil and copper patch. Copper is a function of china, big copper mine in indonesia. Look if i told you to be careful, preportfreeport, what value would i be adding. By the way, when they did the initial deal shareholders revolted because it seemed out of character. By the way, it hasnt worked out well since. No. Can bought at high 2. They bought it to high. Sanchez, people bought it to high. Everybodys going through high yield market. You have said over and over high yield, and im coming back with names people are concerned about on a high yield basis and this is number one. Freeport weve seen go down and down. Balance sheets thats where you want to be focussed. On some of the names. Right. Theres flexibility, it doesnt mean they have any nearterm payments. But keep an eye on it. They can sell phelps dodge, great asset. Great asset. More things to watch in the volatile morning. Opening bell a few minutes away. Back on squawk on the street. Bulldog out with the old and in with the new mattress discounters year end Clearance Sale ends monday. Pup whats this red tag mean . Bulldog through monday, save up to 40 on clearance mattresses. Pup oh heres another bulldog that means up to 48 months interestfree financing on tempurpedic. Pup i found another red tag bulldog what . Where . Pup right here, silly [laughter] bulldog that tickles mattress discounters year end Clearance Sale ends monday. Mattress discounters female announcer get beautyrest, posturepedic even tempurpedic mattress sets at low clearance prices. 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Watching cnbc squawk on the street, live from the Financial Capital of the world. Opening bell in 30 seconds. Talked about low gas prices question is where is that money going because, clearly, consumer did not spend it at retail in december. Well, i just have to tell you, again, i think that when you listen to what Terry Lungren said yesterday, he said they are starting to spend. Look at jcpenney theyre spending. Go over walmart and target youll see decent numbers. I think they are spending. I dont know if numbers are taking into account what they see. I question the numbers. Weak breadth in s p at the open down hire at big board, ringing the opening bell celebrating 25th anniversary, community options, helping people with disabilities find housing and employment. Over at nasdaq the force Film Foundation celebrating new series on pbs, a path appears. So well keep our eye on a bunch of names. Ge one to start with which, by the way, closed yesterday back at 23 and change. Its already one of the worst performers on the dow. This year and last year. Not getting helped by dividend yield protection. People are saying the acquisition is more of an Energy Infrastructure play when Energy Infrastructures on the decrease. I cant disagree with that. What does worry me about General Electric is that they got out of pretty good stuff and they went pretty big into oil. And i remember jeffrey imle ceo saying yes, we do better in 100 oil. Therefore, the inverse is true. Right. Now, when your dividend yield is 200 basis points above tenyear treasury yield, shouldnt there be some benefit or at least some stabilization mechanism, if you will or no . I think so but we want both earnings and yield. We get that from coned than ge. I think in other words, your point being, without really any upside. Growth. Right. The mutual funds dont want to have something that has a good dividend but is not going to have upside to earnings. Ge might have it. Yimjim west texas is green, for the moment. Does the squeeze follow here. We do have inventories, 10 30, thats going to matter. Look, the markets down 180. Yesterday, i looked is it up 280 . My eye sights bad. I got like 70 140 vision. Now were down. We have to get used to the idea that were going to see this kind of swing. The fact is if oil does stabilize right here new york ones thinking that. If the tlt, thats way to look at treasuries blow off level and overbought. No ones thinking about than im cautioning people dont panic. Panic is not a strategy. Companies will do well. You know what . Look wells fargo is a great bank. Warren buffett will come on air and hell be interviewed by becky quick and say, why are people selling wells fargo. Then well say, Warren Buffett says buy wells fargo. I dont want to play the film. I was saying were now theres a big conference at jpmorgan, the San Francisco annual health care conference. People think its in the gold room at overlook hotel and lloyd is not Lloyd Blankfein but lloyd, Jack Torrances bartender is in charge. Elaborate reference. Somewhere between the overlook hotel and shining and the shining star hotel. Its just not that bad. Okay. I know people want to say its bad. Im not going there. It wasnt as great as it was yesterday. Its not as bad as it is today. To my eyes what i find most amazing is that yield on the tenyear at this point. Of course. Starting another year where many people by the way, i understand were only 15 days into the year or less what is it the 14th orr 15th today many people anticipate the year of rising rates. That come midyear the Federal Reserve of the u. S. Is going to start to raise Interest Rates. Lloyd bank fine on air last week talking about risk of immediate move up in Interest Rates and how that could hurt peepople. Here we are at 1 8. Le guard same out the other day and said well gain. 8 worldwide gdp from the lower price of oil. Tlt is in blow off phase im dont like blowoffs. Its a blowoff. Its a parabolic move treasuries. I dont like parabolic moves, they led to another outcome. Everyone thinks rates are going lower now. Do you know any thats not fair. You pointed out lloyd did. When lloyd comes on air, lloyd blank feld. Jamie dimon discussion this earlier said listen when the economy gets going more rates head up. Eventually they head up. How many regulators are shooting at jpmorgan . Six, six regulators what he said. That has nothing to do with the new york im just saying theres people saying stuff all over the place. And im just like look, three guys who came out today on google, talk about google, three gim gim guys said everyones too negative on google. So it goes up. People say everyones too negative on facebook. Im saying we are in a Mood Disorder mode and i just question whether this is a time to sit back and buy some bristolmyers. Mentioned positive sell side comment tear driving google, gamestop, up almost 13 . Netflix upgraded by stevele, after citi upped amazon yesterday. Are the are the bullish analysts foolish here or not . Theyre kind of say, listen these look as i mentioned, those are coal stocks. Gamestop, i was criticized too negative on gamestop. Nice call. Hardware doing better. Im just saying that yesterday we couldnt get enough positives. Today we cant get enough negatives. And that smacks to me of being way to extremist on both sides. Its okay here. Thats all right. Some guys are doing badly. Some guys are doing well. Interesting. S p, rich peterson tells me in the postchristmas period from december 26th until today, 31 s p retailers, 22 are lower. 22. They had a gigantic run. They just had a guyigantic run. Look at volume, 936, look at volume that big cap stocks like 3m 96,000 shares of 3m in trading. Largest companies in the world. No ones doing anything. Whoever makes a move here is creating their own tsunami and, yes, retailers may be all down. But if you look at run of the walmarts and targets, based on just the idea the pump these stocks have very big moves. Once in a lifetime moves. Im saying that move was exaggerated. This move could be exaggerated. Could be. No Systemic Risk. Treasuries indicate theres a lot of moves. Last year known volatility was so low in 2014 here we are, already dealing with significant volatility. One area of the market where it can have impact if it keeps up merger and acquisition activity. We know that. Hard to figure out what to sell and buy when the respective prices are moving all over the map. That takes time. You need to have that. But we have had a good deal of volatility. I wanted to come to another Research Note this morning. I thought odd but interesting, it has viacom down 4 . I sent you that. Thank you for doing that. Citi talking about here is faceoff they expect perhaps that will take place between viacom and dish when dish says were not paying you who you want for your networks and noticed after dropping your programming, smaller providers, cable one, i think suddenly didnt really may have lost subscribers but made it up on the cash flow side because theyre not paying the programming costs any longer for you. Wondering whether that augers for a nasty fight that could hurt viacom. They could pull my viacom my viacom shows . Are you a dish subscriber anywhere in your home . I have dish comcast, optimum and fios. You cover, did. You cover multiple dwellings. Yes. Its a lot of bills youre paying. Really . I had them negotiated. For places sitting empty, paying a cable bill horrible. Quickly, on the record chipotle having to suspend sales of pork nearly one third of restaurants because of supply ratios. Ackman inhumane treatment. Ackman saying hes not sniffing around mcdonalds, down almost 2 . Well, mcdonalds, new ad campaign, has to come with lipitor, we are the real guy. The chipotles interesting, they pulled beef put up signs, and i remember speaking to the cfo at the height of the pulled beef and they said there was no decline in patronage, traffic actually increased. Because people said these guys are the real guys. Mcdonalds, my Charitable Trust owns it because its got a safe dividend. I think that the campaign does resonate with people who dont really care about their heart. Why would you own m mcdonalds theres 3. 7 yield. Ges 3. 9. I dont know. Look i think you own that one but mcdonalds saying you can treat yourself. I like to treat myself and make a buck. You dont think theres mcdonalds is okay numbers arent that great. Theyve got currency risk. Theyre doing right things. Theyre saying were the alternative, thats what wendys is, thats doing well. Burger king when you go to burker king or wendys, which by the way has tv now dont go to these places but continue they have cheese, meat they have a big roll, its not that good for you, and its got good sales. I think mcdonalds has a similar setup. Change the menu clean off the bathrooms off 68. Usage. Watch that. Dows down 2197219. 219. Sitting near lows for the day. A very strange morning. Put up s p futures, because i dont recall any time when s p futures moved ten points on that retail sales number this morning and thats just a very unusual move here. Now you know theory u. S. Consumer Global Engine of growth. They weakness is cause for concern. Reaction, due to the decline in gas station sales. But the analysts ive been talking to say that there was weakness in general merchandising, worse than expected electronics and internetinter internet sales. Thats spooking the market. You cant can saying gas station sales were down. Financials are weak earlly. Weakness in consumer discretionary, Health Care Materials having a rough day as lot of big commodities continuing to downside. Metals copper we noted all morning down 4 . Another sixyear low. Zinc weak. Nickel is weak. Base metals in general weak for a while. Grains on the weak side. Talked about freeportmcmoran, a company that gets half of revenues overseas 45 in u. S. Good part in japan as well thats down. Thats not a typo down 9 right there. Most of the other big metal names are weak. Crude to the upside today. Still seeing weakness in some of the big energy names as well. But not quite as much as weve seen in prior days. Oil to the upside. Theres some of the big energy names. European quarter justice had a big ruling said omt, outright monetary transactions, thats the one that allows them to buy sovereign debt on the secondary mark, it was legal. Thats a big victory for draghi and the ecb. Its not helping france germany or spain. Thats because the Commodity Markets are bad, as i mentioned, and seeing commodity stocks hit over there, as well. No lift, though thats very good news for ecb. About our earnings here wells fargo number, company i care about most dont have much as in Mortgage Business and not as big as used to be i thought very good numbers. Total loans up 4. 9 . Excellent, better than expected. Auto loan growth numbers, almost 10 . Better than expected. Anybody surprised home lending, yearoveryear number down 12 . I think that was roughly in line with expectations. But overall, i thought numbers were pretty good. Wells fargo, take a look trading down just fractionally as you can hear wonderful run last year. For the big financials, jpmorgan, on disappointment. Leading financials. Thats one of the reasons financials to downside down almost 4 . Citi group and Morgan Stanley to the downside. Lows for the day, carl down dow 240 points. Bond pits. A lot of action today as well. Rick santelli at cme. Good morning rick. Good morning, carl. Big talk on this Trading Floor is, why so many are scratching their heads whats going on in stocks . Is it too much . Does it make sense . Does it match the fundamentals . Too much volatility . But what trader are getting at they didnt hear any of that on the way up when matching the direction and intensity of the marks against the fundamentals of the economy, didnt make sense to some on the way up either. So whats the fallout . Rates continue to be best indicator of whats coming down the pike. Look at retail sales today. Consider what rates have been doing. Well use a lot of charts and move fast. Here you see the intraday ten, obviously, it didnt like retail sales. If you move back to the beginning of the curve, youll understand the whole picture. One, twoyear notes, important, look at way short rates are dropping. There there december, its a huge move down, considering how small yields are on 2s and 3s compared to the curve. Changing expectations about the fed and deservedly so considering retail sales. Twoyear chart of 5s. You can see over two years, down at levels that are significant, considering all of the wood under, meaning trade of the past. These are lowest yields should we close here since october 2013. Twoyear chart on tens lowest yield since may 13. You see the picture there, tens are developed and going to areas. 30year bond we had to go to 20year chart, youre not going to fine significance on a 2, 3, 5year. Alltime low yields should we close under 2. 45 which seems a high probability. Move to Foreign Exchange a bit. Remember talking about 120 and the dollar yenning like many talking about 40 in crude. Its not precise. But now, as you look at oneyear chart, consider the yen has been mostly wrapping the dollars falling. Thats the dollar yen significant here. Pay attention to that. Whereas oneyear youre reversus dollar doesnt look good. 22nd meeting. People werent surprised by the german court ruling. They said it was like roberts. Is the court going to challenge the way the entire economy has been calibrated what the ecb does or health care did . They move out of the way, let the bus go. Back to you. See you soon. Rick santelli at cme. We have some early buying in oil. Jackie at the nymex. Good morning. Thats right, seeing a pop on both sides of the atlantic here up 34 cents on wti, 20 cents on brent. Trade telling me buying action is not surprising. Its slight compared to what weve seen so far. Also options exploration adds to volatility. Downside buy is remaining the worlds bank reducing Economic Growth forecast bearish for prices. A lot of traders are telling me looking at the downside objective, 33 low we saw in 2009 was the whisper talk out there some people looking beyond that now at this point saying crude could get crushed here. Meantime wild card is the d. O. E. Report at 10 307 api report, some traders expecting a slight draw. Well see what happens at that point. I want to mention, retail gas prices 2. 10, they continue to decline. But a lot people surprised at the retail sales number in november wasnt impacts by the drop that weve seen in gas prices. Certainly on the way downward at that point. People wondering if consumers are not spending money elsewhere but saving it. Guys, back to you. Thank you. Jackie deangelis. U. S. Chamber of xlers ccommerce ceo tom donahue. Dows down 231. At these levels the worst day for the dow in january 5th, week and a half a sign of where we are as the new year has begun. Back in a moment. Take a look at breadth on s p, a lot of red today, after retail sales disappointed and jpmorgan didnt have a lot to crow about. Still keeping our eye not just on oil in the green but 30year, hard to look at jim, 24. Thats why banks are down. Wells isnt down as much. Jpmorgan had question marks and i was surprised at charge. I feel like did jamie take his eye off the ball or is the bank disliked by regulators because its viewed as being someone that had repeated problems . You never talk about maybe the regulators dont care for jamie dimon. Its possible. Its possible. The way things were done they seem to be overly picked on both for socalled Balance Sheet they may not think be fortress. I understand. Wells fargo, john stumf bank of america paid plenty of money as well. Bank of americas not the stocks not holding up there. Rates are too low. Rates are too low. Make more money when rates are higher. Jamie dimon said it if rates go to 4 they make another couple billion. But they arent. Regulators, like wells. And former coo, attacked regulators. Stop trading with jim. Dow down 196. Squawk on the street will be right back. Female announcer get beautyrest, posturepedic even tempurpedic mattress sets at low clearance prices. And through monday, get 3 years interestfree financing on selected models. Dont miss sleep trains year end Clearance Sale. Your ticket to a better nights sleep plenty for bears to work with today. World bank cutting forecast retail sales disappoint markets down 224 on the down after the reversal to the downside yesterday. Cramer. Scare people. Gasoline disposable income where is disposable income matter for people making 40,000 or less . Go to Dollar Stores. Charitable trust owns dollar general. Locked in a range, people dont know whats going happen. Fill me in. 22nd is when the vote will be held on dollar trees deal acquire Family Dollar. Dollar general as we know jim, of course has its own bid out there. But the Family Dollar board has a lot of issues with the idea of whether it could close that bid, given antitrust concerns and a huge potential number of stores need to be divested. One development i can tell you about, iss, i flew engsnfluential Advisory Firm reversed their recommendation to shareholders of Family Dollar. Saying we believe you should vote in favor of the dollar tree deal given additional month of december adjournment they adjourned one vote right. Its not led to material improvements. Risk additional adjournment could jeopardize transaction and the risk of not closing on eat transactions underscored by Family Dollars earnings miss. Waiting for dollar general. Time is going by here. One might have thought they would have come back with different offer on antitrust front to keep iss recommendation going their way. Dont know about the takeover. Okay. Thank you. My view. Whats on mad. Espr one of the greatest performers a Biotech Company talk about charles river, how quickly to monetize. Celgene down two bucks. Regeneron going higher. When people think the economys slowing they buy biotech. Good work. Jim cramer mad money, 6 00 p. M. Volatile day on wall street. Dow down 1500,200 points. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. 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For a free quote today,call Liberty Mutual insurance at see Car Insurance in a whole new light. Liberty mutual insurance. Take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Good wednesday morning. Welcome back to squawk on the street im Carl Quintanilla with sara eisen, simon hobbs, david faber at knock stock exchange. Another volatile one as retail sales miss. Jpmorgan with its biggest miss since 2008. Dows down 210 points. We want to take a look at jpmorgan the banks profit falling more than 6 in the Fourth Quarter. Hit by legal costs, stock is 4 lower on that news. Well have more on what you should be doing with jpmorgan later on. Lets get to the road map this morning. Elan elan elan musk says tesla might not be profitable until 2020. Also ahead, retail sales posting largest decline in nearly a year at headline level. What does it mean for the broader economy and will lower gas prices help . Clearly not. Copper falling to 5 1 2 year low. Its a barometer for the global economy. Should investors be worried . Talk to rbcs chief commodity strategist about that. Getting breaking news on business inventories. Santelli in chicago. Rick . Carl, november business inventoryies rise. 2 in line looking for up. 3. 4 but in line. Different picture than november whole sale inventor tos last week where we saw a big junk in inventories but a drop in sales. You want to move the inventory, thats why we pay attention. This is november number, figure prominently in trying to calculate the Fourth Quarter gdp. Back to you. All right. Thanks very much Rick Santelli. Dig deeper into that as well as the big retail sales number. Cnbc senior economics reporter Steve Liesman back at hq nothing major in headline in line with forecasts. But boy retail sales dis disappointment. Looked like the grinch succeeded this year in stealing the christmas and cindy lu was not there to melt icy heart or as many suggesting the number is all wrong. Im getting comment tear on that. But first, lets me tell you what Steve Stanley said, based on the list one have to conclude the christmas selling season a disaster though most stores came out of the period saying things went well. Heres the stage, set by declining gas prices strong job growth, put more money in americans pockets. Result, a big drop in gasoline sales but were not seeing the gains any place else. The numbers that rock the market this morning. Down zeer 09. He exautos down 1 with the core number that feeds into gdp which was down. 4. November revised down to. 04 from 0. 7. October and november core sales strong still on pace for 4 sales growth in the Fourth Quarter. Here are details. Big plunge in gas station sales. Down 6. 5 . But building equipment fell electronics, clothing gave back some gains but not all from november. And Department Stores down 0. 27 debate over this number. I want to start with one of the strongest statements, a guy ive known for years sebnt this in last ten minutes, we do not believe the consumer is pulling back and the report paints a misleading picture of Consumer Spending at end of 2014. At jeffreys, this data does not suggest consumers are spending discretionary funds that the lower gasoline prices created. Thats on the other side. Whatever you think is right here, heres what the market thinks about the fed. We are now down, folks, for december 2015 fed funds futures contract, to 41 base sis points. Those equals low of the contract as we price out at least two federate hikes and maybe, guys down about 16 basis points lower from here we would price out any federate hikes this year and if you add the decline in december wages to whats happening with inflation, of course, the Inflation Expectations as measured in the tips more and more market seems to think maybe the fed does not move this year. Simon . But i think its really important, steve, to separate out to very different factors or potentially different factors. One, what happens with oil and Commodity Prices arm the world, fed into the expectation. Fixed income doing Something Big very over here. It may not be connected to the retail sales figure. I dont really see what the drama is in this. People saved a lot of money on gasoline, they spent slightly more on suvs, and still had money to spare. Thats all that those figures say to me. An environment where we know that were creating a quarter ive million jobs every month and know the economys increasing at annualized rate of 5 in the Third Quarter, this is still a very strong economy. The consumer just didnt spend all of the money they saved on gas. These are very consequential questions that youre asking here, if consumers save this money, the result you get is lower Interest Rates as savings and investment disbalance increases. If they spend it what investors want to do is be in front of where that moneys being spent. What im hearing from economists, hold your horses, this moneys going to make it into the economy, it just a timing issue when its going to get there you had a relatively strong october. Relatively strong november. December looked like it was a really bad number. And now attention turns to january. Okay. I would point to the fact that the headline figure xgas down 0. 4 . 0. 5, its a lot of drama. I take the point, its the biggest month i imagine of the year for retail sales. Steve will join us later in the show. Lit lets bring in cohead of wells fargo investment and the chief Global Investment strategist at Charles Schwab. Jeff, what are you bringing to the table here . How worried should we be about the consumer . I dont think we need to be worried about the consumer. Consumer cough dense surveys coinsco coinsco coincident with retail sales. In germany postrecession high. And in the uk post recession high. Not worried about the consumer here. Some days we get good data some days bad date tap new trend in volatility. One many may not be prepared for in 2015. My question whether its possible in this environment for people to hold their nerve and say this is a very very good year for main street. You will have oil prices falling, input prices falling, electronic import prices also falling. We generate a quarter of a million jobs and economys expanding at 3 4 . Main street may do very well can i make money on the stock market at the same time with Everything Else thats go on with commodities and the rest of the world . I think thattic equities post globally in 2015. You havent rebalances your portfolio in a while, do that. Putting money into the mark dollar cost averaging a great way to take advantage of volatility. If you dont need to look at 401 k statement every day, dont. Brian, before we tear our heart out, a lot of guys in your environment, a lot of investors making a lot of money, continue to make money in fixed income. Where will we go from here . What works in your space, if you like . Well, in the nearterm, i think the Current Trends continue. So until oil finds a bottom until some disinflationary pressures go away rates remain low. What happens working continues to work. Longer term yields stay lope hunt for yield is on. So, all of those products that provide added yield are going to continue to see a lot of demand from investors. Jeff no matter how confident you are on the strength in the u. S. Recovery in the consumer clearly volatility is going to be the name of game. The triple digit moves in the dow becoming the norm of 2015. How do you protect yourself from that if you are sticking to your bullish convictions on u. S. Stocks . Well, one of the ways is through, again, dollar cost averaging. Taking advantage of the dips and putting money to work. I dont think try toll time the market will make sense. Weve had nine trading days four up sorry, four more than 1 move half up half down. I dont try to time that marketplace. I think id take advantage of volatility and buy on dips. Buy markets that are depressed, like the emerging markets. May sound crazy but as of yesterdays close, theyre flat relative to the u. S. And other markets that are actually showing losses yeartodate. They may hold up better. So, sorry, sorry, let me back up however, jeff. Youve spoken about parts of the market that dont fall as bad as other parts. You expect markets to fall to fall . Let me ask the question. When we have Deflationary Forces as we have when we have oil doing what its doing, miners doing what they are doing, do you expect World Markets to fall this year . I do not. I expect World Markets to rise. How much in this country . Well in this country, you know we expect modest gains this year, not huge gains. And again, accompanied by volatility. But those gains may be mirrored by very good results in the emerging markets, something we havent seen in some time. Okay. Well leave it there. Thank you for your advice. Jeffrey from Charles Schwab and brian from wells fargo. Shares of tesla in the red. Stock down after elon musk said the company may not be profitable until year 2020. Phil lebeau live in chicago. Busy day for autos. Very busy day. A onetwo punch to the gut of tesla bulls. Short term and long term news that has few people worried. Short term worry, client nap yesterday, after the bell in detroit, elon musk said that they expect Fourth Quarter sales in china to be unexpectedly weaker than expects. A shortterm issue dealing with misses perception among chinese customers about difficulties or challenges of charging electric vehicles. North america and europe sales should offset weakness in china. Heres musk explaining about problems theyve run into over the last couple of months in china. China certainly weaker than expected. Mostly, i think, because of misperception about the difficulty of charging which were correcting and we are seeing now uptick in our sales in china. Just werent all that significant in the Fourth Quarter. I think the china situations temporary are will get corrected later this year. Longterm concern for tesla bulls has to do with profitability of the company. Yesterday afternoon muvg saidsk said if he had to target when the company would be profitable 2020, the Third Generation vehicle in 2017. Plan to produce a few million vehicles annually by 2025 that might have encouraged some people to say, look long term, guys are on the right track. When you look at shares of tesla, near term the stocks under pressure. Trading at levels we last saw in may of last year and within the last hour a note out from barclays headline comments from yesterday are splash of cold water on the hyper bull these this when it comes to tesla. Frustrating for investors looking for a sooner profit. Thank you, phil lebeau. When we come back jpmorgan hit by legal costs in the Fourth Quarter. The stock trading down 4 as we speak. Jamie dimon says the bank is well positions for the long term. So what should you be doing with na stock in the near term and long term and other financials . Well talk that when squawk on the street returns. Legalzoom has your back. 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Female announcer during sleep trains huge year end Clearance Sale, get beautyrest, posturepedic even tempurpedic mattress sets at low clearance prices. Plus, free sameday delivery, setup and removal of your old set. And through monday, get 3 years interestfree financing on selected models. But hurry this special financing offer ends Martin Luther king jr. Day. Dont miss the year end Clearance Sale at sleep train. Your ticket to a better nights sleep welcome back to squawk on the street. Check out shares of netflix, gaining ground in a down market but off highs now, after Stifel Nicolaus analysts upgrade the stock to buy rating from hold, citing kufrntcurrent valuation and saying it has a compelling risk reward valuation because of the content style. Stock up 1 . Down 25 , sara over the past three months. A bright spot in todays down market. Check on the markets. The dow down more than 200 points at the start. We are now down about 142 points, still sharp selloff in the wake of the disappointing retail sales report. U. S. Bright spot along with u. S. Consumer in the global economy. Also want to check on the rally in government bonds. We see record lows right now on yields of the 30year treasury. Record lows on yields of the canadian 30year treasury 10year treasury japan, safe haven debts rallying. The European Court of justice ruled theyre okay to buy bonds at ecb . Thats a major factor. Well talk about it later. Materials are down because of copper. Thats deflation within the commodity space is the issue. Financials, the second most heavily falling sector today. In the wake of what we got from jpmorgan. I think a lot of people shocked, certainly, you have that charge on legal costs at a billion. Watching this earlier, suggesting banks might be in the same category as tobacco stock you get the continual litigation risk, roll of the dice. Compare tobacco names. Jamie dimon on the call simon, david, sara, 50poopooing the idea of a breakup. Unexpected fall in retail sales weighing on markets but we have come back down 140 points. Investors worried about the state of the World Economy and what happens happening with the consumer here. Will falling gas prices mean spending bounce is back. More on that after the break. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Push your enterprise and you can move the world. But to get from the old way to the new youll need the right it infrastructure. From a partner who knows how to make your enterprise more agile, borderless and secure. Hp helps business move on all the possibilities of today. And stay ready for everything that is still to come. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Jpmorgan reporting a loss in quarterly profit the bank weighed down by a billion dollar in legal costs in the wake of government probe for alleged wrong doing. What can we expect going forward. A neutral rating. Good morning. The news, it seems like Conference Call has been lighting up the phone lines, saying that they dont see imminent issue on oil, still looking for higher rates in 15. Headlines in your view . Well no question that coming out of the print, the core results missed the consensus numbers which i think was the issue. When you adjust for a bunch of the noise in there, legal charges, as you mentions among the core that we had a core earnings number of 1. 25. The big doubter was the capital didnt improve from a tier one common ratio perspective. Thats a big issue. The fed came out with their new additional buffer that theyre going to hit jpmorgan particularly with. And thats something that investors have been focused on. I think that was something that became a bit of an issue here. Weve referenced jamie dimons comment about banks being under assault a couple of times this morning. You say its a great franchise but prefer to own earnings recovery stories, such as what . Morgan stanley, citi group, bank of america. All recovery stories in different ways right . Morgan stanley is a story where theyre changing around the strategy witchswitching over to Wealth Management business. I think youll get a better multiple out of the business. With citi group, unlocking of the trapped capital, stuck in there with the different in between gap capital and regulatory capital. Bank of america, shedding legacy costs and also got a more retail oriented deposit base which will allow you to benefit from the rising Interest Rates to a greater degree. Another question here on the legal issue, which was a big surprise that 1 billion plus number for jpmorgan. Where do you expect that number to go into next year . How do investors havefully sense of how high that number gets . On this manipulation allegation where does that go especially the Justice Department has it under criminal investigation . Right, right. Theres a lot of questions in there that are hard to answer. Number jun, we had an estimate of half a billion of legal. 1. 1 billion pretax was not hugely out of line bigger than we were looking for, and we adjusted for it in the core number that i rifrnsed. But we were expecting something. They had a billion aftertax charge in the Third Quarter as well as you might recall. While this was additional moderate headwind and its i been a nuisance for a while, its not part of the core results here. So most investors starting to look through a component of the legal charge and theyre starting to think about, okay what can guys really earn . This is something that well have to deal with for im not sure how long but its not part of the core results and its going to just hurt capital. People think whats they going to do to capital ratios and what thats going to do the outlook looking forward to return the capital. The criminal investigation to go briefly . To be honest i have literally no edge to give you information on that front. You know when usually you dont see criminal investigations of major Financial Institutions for the obvious negative Economic Impacts that youre going to have there, but if youve got a big problem, i dont think anybody can handicap that to any serious degree. I point out about fx weve seen settlements with regulators right. We had some in the Fourth Quarter. That was based upon building up the reserves in the Third Quarter. We hear the doj is getting close. Thats the last big one that needs to happen. So it wouldnt be surprising to see doj and fed get settled here in the beginning of 2015 maybe first half. Brennan, pick up the point you were about to make on return of capital, if you would . Sure. Of course everybody we get the ccar results in march . Banks are in the process of splitting that now. What were expecting, what im personally expecting to see for jpmorgan, is a big reduction of capital returns to the fact that i i made reference to earlier, where the fed is now applying a much Bigger Capital stand order to jpmorgan which is going to be a headwind versus others. Ive got their capital return as percentage of earnings dropping to 50 . Theyve been a leader on that front whereas ive got citigroup and b of a up to 50 april component of my person there as well where directionally b of a coming up. Thanks for your insight. Joining us ubs on jpmorgan. Also we learned that consumers showed restraint on spending, as the Holiday Season ending causing u. S. Retail sales to fall. 9 in december. Why were shops are reluctant to spend their gas pump savings else where . Joining us to discuss this question of the day, liz dunn expert along with Michelle Meyers economist at bank of america, merrill lynch. Whats your explanation . 9 out of 13 categories down. Holiday season savings from gas prices how do you explain the pullback . Im struggling to. I was surprised by todays report. Headline number was going to be weak because sharp drop in gasoline spending but i thought the core number exautos Building Materials and gasoline would have been up modestly. So i tend to think that its more of noise than anything else. I think its a blip in an otherwise strong trend for the consumer because, look at consumer backdrop healthy job growth increase in disposal income savings from the drop in gasoline prices lower Interest Rates, wealth appreciation and Consumer Sentiment is improving. Yeah, sevenyear highs for consumer confidence. Does this do anything to groit forecast . It does. Takes down tracking for q4. Tracking 3. 4 for q4. Its strong Consumer Spending numbers on q4 aggregate, were solid because of the strong start to the quarter. Makes us think about what we do with q1 because facts unfavorable heading into q1 figures. We have to think carefully what we pencil in for the First Quarter now. 3. 4 growth in the Fourth Quarter after 5 in the third, its really good. Yeah. Thats a base isnt it . It is it is. Thats why i think its important not to overreact to one rereport that tends to be noisy and ubt tosubject to revision. It was weak. It was a disappointing report. We had other data on the u. S. Economy thats been strong. Gdp is adding up to look solid. Would you agree with that . You look closely at the companies themselves retailers, and some of the traffic patterns. Right. The numbers were out of line with what we saw from the retailers. Most of the retailers reported strong results, those that reported. We saw a number of beats across the Specialty Retail sector and Department Stores sector. A number of companies we havent heard, from like kohls sears, where theres maybe weakness. We have Companies Going out of business. Maybe its a tale of two cities. I was surprised by numbers. I think consumers being cautious with their dollars, but i do think theres a lot of noise in the numbers. How much of entire retail environment reports figures . I imagine its actually a small proportion. Well, yeah, in terms of the numbers for december and numbers for the Holiday Season. Its fatherly small. We dont have great optics from what those few that say what they say doesnt really tell us about the economy overall, does . Quite a few of the Specialty Retailers reports, macys and pennys numbers. So its a pretty good cross section. We heard from gap, limited, in terms of december reporting. 30 of the economy in total, those that come through with figures . Im guessing. Yeah. Probably a little bit less than that because you dont have walmart, but nonetheless, i think that those retailers are a little bit of a bellwether retailer and they say a lot about the consumer. Do you have to buy the Retail Companies right now that do stand to benefit the most from those lower gas prices. Carl and i were talking about, the idea that perhaps consumers just waiting for prices to go back up they dont believe they can stay sustained this low. Once they catch on to that which retailers do you want to be in. The low end, mass and Dollar Stores are a better place to be to benefit from gas prices. Consumers cautious and waiting to see if this gas price thing is real and i think they take a while before they adjust spending pattern. That said, high end continues to be a better place over the long term and retailers that target that high end consumer are better longterm investments. Love your input on that question because, people write in, say, gas prices didnt start really falling until we were well into the Holiday Season so to speaking even if crude topped in july. What is a reasonable lag effect for the consumer to be convinced that in fact get low gas prices are here to stay . Historically certainly a lag of a couple of months at least. The real drop in gasoline prices start in september. So by december they have had a few months low gasoline prices. But the consumer is cautious. What we saw throughout 2014 is actually an increase in savings. So maybe that was the first tendency as to save some of this windfall cash on the expectation that perhaps gasoline prices will head higher. When if we dont see that then maybe that savings come out and you start spending or perhaps saving for bigger ticket items as well. Its a timing issue. Big picture for consumer should be one of improvement. All right. Well leave it there thank you both. Well see what happens next. Liz and michelle good to see you on retail. We were higher on oil but struggling to hang on to gains. Over to Jackie Deangelis with breaking news. Simon, thats exactly right. Actually, oil prices got whacked on the department of Energy Report on crude oil inventories. A build of 5. 4 Million Barrels in crude. Now traders estimates all over the map some saying we could see a draw today which would have been bullish p this is bearish. Up 50 cents before the report. Now switched into negative territory, 45. 875 as i reported earlier, traders saying that most data points now are pointing to the downside in terms of crude price the world bank reducing Economic Growth forecast bearish. And downside objective looking at 2009 low of 33. But now at this point, traders are saying we could potentially go under that point before we bounce back up. Right now crude prices 45. 68. Back to you. Okay. Thank you, jackie. Carl . Straight ahead if coppers seen as a barometer for the global economy, things not looking too good. Prices falling to levels not seen since mid2009. Well talk to rbcs chief commodity strategist though oils on the mend in a minute. Oil prices down more than 50 in 6 months. The question is what does that mean for neighbors to the north who depend heavily on oil . Brian sullivan who conquered na boxen several times in calvary with the story. How are you doing. Its like 8 30 the suns not up. Maybe powered by oil. Who knows . Points of oil well taken. But heres the thing for investors. About 70 Canadian Companies that trade in the United States 15 major oil producers. Viewers in the states are buying companies. Two different types. Hear about the oil sands, thats a strip mining but youve got steam extraction a different type. I dont want to call it fracking but a different production. Companies that you invest in got to know which do they do. Chatted with head of Energy Research at ihs yesterday and we asked him to explain the cost difference between the two different types of companies and oil extraction. Heres what he said. On the operating costs, much lower, talking about 46 on average for a mine to operate versus facility down around 20 of eti. Higher costs to bring online not higher costs to operate. So of the companies that are currently operating, guys 46 really the break even for the miners on average and even lower 20 lower than people think, for some of the more normalized operations drillers and the steam extractors. Now we also had a chance yesterday to go to transcanada transcanada, the Parent Company of the politicizing Keystone Pipeline we sat down with the ceo of transcanada in their headquarter building yesterday. Talked about keystone. Well get to that later today. But we talked about whin whenen does the supply demand balance get even again. We still have ways to go before supply and demand balance itself out. Is it it will take time for production thats currently on and drills and coming into the marketplace to come off again, thats a 6 to 12month time frame, as well you know demand is going to change. Nobody knows how thats going to occur. But thats not going to happen in 60 days. I think that were in this for, you know ache period of time. I dont know how long. Guys so there you go. Its interesting because we get a lot of people on the air, cnbc will say oils going to end year xdollars on this date. Russ girling admitting we dont know how long its going to take to correct the imbalance. They expect production to continue plans for companies laid out multiyears in advance. Weve talked about this before, but part of the impact on the Canadian Dollar below 1. 20. Thats a big deal for canada. Makes their imports more expensive, talk that its going to impact the economy . Yeah, absolutely. How did high know youll bring up currency . Makes moose head lager cheaper for us. Canadian dollar going off a cliff. I dont have a monitor, but the Canadian Dollars falling. Theres a been fit, in a way, because canadas a major exporter or of oil that does help them. Youre europe, japan, currencies going down against the dollar net importer or price taker, if you will thats going to hurt you. I guess the one upside would be that the Canadian Dollars weakening a little bit to ease their pain. But just a little. Makes sense. Looking forward to what theysay on keystone. Commodities remain the eye of the storm. Copper has had a bad session. A lot of the global miners have been slammed very very hard on todays session, notably those that trade in london. Thats on concerns of a china slowdown. And oil continuing to see volatility. A look where we are at the moment. Within the last eight minutes, weve had Inventory Data there slightly higher 46. 10 but still clearly extremely depressed. Joining us at post nine rbc capitals chief commodity strategist, helema croft. Good morning. We heard russ gurling say he had no idea when the market would balance itself out. Do you know where oils going. Its a hard market to call because in many respects this could end tomorrow the price rout, if saudis said were out. Well take 2 million off the market. Its a hard market to call. Thats the essence of the call that you have to make. You got to make that. Either bounce back and the world returns to what it was. Right. Or it doesnt and the world looks very very different once the lags have kicked in. Which side do you come down on . I come down on the side when i look at saudi arabia when i look at middle east i think theyre prepared to push prices and very negative signals for six months to bleed out as much nonopec production as they can, but i dont believe theyre in if for the long haul. I dont think they can burn reserves. You think they will maintain prices at 40 for 6 months. I think they will have then pull out. Goldman sachs says 6 months at 40 a barrel shale production cut. Thats the fulcrum of time. As long as king abdel la rallies from health problems, you can be in a sbags where they try make it to the next opec meeting before theres a cut. Things could change if theres a new king somebody else guiding the oil strategy in saudi. Interesting. Thats not the analysis weve had that the king is that important a figure in changing the strategy carl. Correct me if im wrong. Theres that, repeated notion if we cut 2 million, somebody else will do the 2 million. Your point, in 6 months the other person wont be there . We dont know. We could be looking at suck seg succession. The crown princes son is senior in the oil ministry some reports hes not happy with the lower for longer strategy. We should look at potentially, is there a shift in saudi strategy. Can you make a clear call on copper . Thats watching the china story. You got a rally in crude, it could lift a lot in flux. Why does a rally in crude lift metal prices. Some individual specifics for markets but i think the china story is pulling everybody down the concerns about demand. I mean its not just oil. Its copper. So any sign that you have of improving demand picture will rally the commodities complex. Is the demand in sync with whats going on in commodities . We saw chinese import numbers. That was a record jump. Maybe stockpiling, maybe taking advantage of lower oil prices. There had been a sense, a cat left for the low movement down over the summer weak numbers out of china, particularly bad july number. I think the lag effect certainly if you have some months of improving chinese demand, that will be helpful. But ultimately i i do think its going to come down to a question of opec cut, when do the cap x cuts bleed through . Its a rough six months. I think its a lot of uncertainty until we know really what opec is going to do. How much damage gets done here until that point. How much are they weighing that in their decision . What point do they say, enough cap x has been taken down we can live with this lets try to retain our reserves. Nice to see you. Helima croft from rbc capital markets. Commodities, over to dominic chu and get a market flash. Copper stocks taking a hit todays trade. Freeportmcmoran and southern copper plummeting on those falling copper prices. Down from 7 to 10 on the day. Back over to you guys. Thanks dom. Walt mossberg reviews a gadget that claims it can boost your iphones cell reception. Could be useful. Its ahead on squawk alley. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. Approaching medicare eligibility . You may think you can put off checking out your Medicare Options until youre sixtyfive but now is a good time to get the ball rolling. Keep in mind medicare only covers about eighty percent of part b medical costs. The rest is up to you. 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These are the only Medicare Supplement insurance plans endorsed by aarp an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free [decision guide] and start gathering the information you need to help you keep rolling with confidence. Go long™. Have a look at financial sector, one of the worst performing in todays session. Back of two big earnings reports. Dom chu with more. Second worst performing sector in the s p 500, tough day overall for the sector. One of the weakest, like you said. Jpmorgan shares one of the big earnings reports leading to the downside after posting weaker than results. Goldman sachs, Morgan Stanley, citi group to downside. Withdrawing type day in the overall session. Well keep an eye on big cap banks. Over to you. Thank you. Over to chicago and catch up with Rick Santelli on a big day for the markets. Big day. Ever every day for 2015 apretty big in my book. Special guest, Rebecca Corbin founding and managing partner. Thank you for taking time to fly into chicago. Q4 survey your surveys global you have respondents all over the globe. 1. 7 trillion in total asset. Main differences and similarities . Good bad points between q4 and q3. Investor sentiment soften. Third quarter and the two quarters leading up to that report that we commented on saw an increase in bullish sentient. We saw reversal in that. More people describing themselves as bears. More investors talking about management tone softening and downright getting negative. Im not surprised. What is one of the more important issues, they be more cautious what they want to protect. Investors . Yeah. Investors are absolutely completely focused on cash number one metric on which they place importance. All right. Buydaks. Lowest rated return of investment. This isnt a new trend. No. So is many of our guests especially from the standpoint of buybacks being at the denominator of floating stocks one of the bullish trends and reinvestment being weak what do you see on reinvestment side. Number one preferred use of cash is reinvestment. In terms of returning cash to shareholders they prefer dividends over buybacks. This is Global Sentiment irrespective of company. Optimistic part of the difference . U. S. U. S. The bright spot in an otherwise bleak global world. If were setting the bar on a relative scale, well grade on a curve, okay . If the u. S. Is the best on the curve, wheres the weakest . Latin america. Wow. Japan. Thats the perception from investors. What about china . China, there is a lot of concern about china in term of slowing growth still. I would say the investors that we spoke to based in asia pacific were more bearish, specifically europe latin america, north america. Federal reserve any reasons in the answers by your respondents why the markets held up well . Does the fed or central banking show up in the survey. Absolutely. Fed talked about Global Growth concerns and rank it as number one driver of the markets since then. Mostly the u. S. Side respondents. U. S. Side. Not so much asia and europe. Asia and europe invested in u. S. Equities. Weve seen an intense inflow from international. Notion retail sales, keep this realtime, retail sales soft. Maybe the fed wont tighten. Something that surprise respondents . I think so. Quaut qualitative feedback looking for positive sales. Thank you. As weve been discussing the retail data may be incomplete not taking into account new people shop at least one opinion. Straight ahead, one of the ceos behind one of those very new ways the head of boxed in a moment. [container door opening] what makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. Ive been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. Stocks are falling sharply, dow down 162 points following the drop in december row tail sales despite continued gains in Global Mobile commerce. Our next guest hopes mobile will reinvent the wholesale Shopping Club experience boxed aiming to take a bite out of costco and other wholesalers bottom line. Joining us is box ceo chieh huang. I understand you are here to share funding news today. That is right. Were happy to announce we raised 25 million in Equity Capital and with that capital we can go after additional expansion of assortment of distribution facilities and making the Service Better for our customers. At what valuation . So the valuation i think were here at the nyse the only valuation would matter if we pressed the button here. Youre not going to share. Yeah. Youre trying to shake up the big box wholesale shopping business costco online sort of. I would say shake up but with an as strike. Costco has an incredible business, dont know if theyre down today but one of the only Retail Stocks that is is perennially very strong. Their demographic is 60 boomers and seniors where we go after completely different demographic, 25 to 44. No membership free fees Free Shipping over 75 bucks and cheap prices. Why why isnt amazon doing what youre doing. You have walmart sharing the same parking lot as costco. Costco you have to pay to go in yet a lot go there. Carl was saying before carl it has kids and he needs a big box item so he will go to the big box retailer. Same with us. When you offer people the choice between the small sizes and big sizes usually they gravitate towards the small sizes unless a change of mindset when they walk into a wholesaler. Thats what we are. Big names on this list peter thiel, jerry yang, gg we have all the times. Jeff richards. I think all the people that you named just there, one, incredible experience in retail but more importantly, incredible believers in mobile commerce. Thats what were going after. The key of what were doing and why the younger shoppers are shopping with us were strong in where they go live in social media, thats on their mobile devices what were going after. Are you making money . We are. We are or else we would have raised more capital than kind of what we have. Were its still the early days for us. Were invested into growth. How do you make money . You hold your inventories. We do. Unusual for an online retailer. Its the only way we can guarantee delivery times to you and only way we give you a good experience. So on that kind of subject were constantly lowering prices when we get a better price from the manufacturer or from whom ever we pass that on to the customers. Interesting story. Keep an eye on you. Thanks for sharing the news chieh huang the cofounder and ceo at boxed. Almost time to cast aside our neckties and strut down the alley. Jon fortt is here with more on what we can expect. Thats right. Well put high flyers under the microscope on squawk alley. Gopro after plummeting yesterday, is looking the best among a bunch of tech stocks on my radar this morning up better than 3 . Whats going on there. And also tesla talking about troubles in china. Profitability twice as far away as some had hoped. Well look at that one today. Also netflix, bucking the trend with some of the high flyers going higher on an upgrade. We will look into why coming up on squawk alley. Talking to your rheumatologist about a biologic. This is humira. This is humira helping to relieve my pain and protect my joints from further damage. This is humira giving me new perspective. Doctors have been prescribing humira for ten years. Humira works for many adults. It targets and helps to block a specific source of inflammation that contributes to ra symptoms. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers including lymphoma have happened, as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. Talk to your doctor and visit humira. Com this is humira at work good morning. 8 00 at tesla headquarters in palo alto, 11 00 a. M. On wall street, squawk alley is live. No sleep until brooklyn joining us this morning, michael san tolly, yahoo financial senior commerce jon steinberg, cnbc contributor. Jon fortt and Kayla Tausche on a day where the markets are in the lead. The volatile selloff at the getgo after sales disappointed for december. Pretty modest quarter out of jpmorgan. Meantime tesla and other things at work. But in general weve bounced around the 2,000 level on the s p and oil were watching closely which is moderately in the green right now. Mike, people either dont want it to believe the retail sales number and if they do they say it points to we have a problem. Skittish market to begin with. Copper prices collapsing overnight. A lot of these big asset markets moving in ways that seem to keep